Answers for all your real estate questions

Category Archives: Buyers

In June 2017, cybercriminals stole more than $14 million from unsuspecting people. Real estate transactions are especially vulnerable to these wily larcenists.

Real estate purchases routinely involve sending large sums of money by wire. This method is convenient, fast, and generally secure. Still, sophisticated criminals have been able to exploit people’s lack of familiarity with the real estate and escrow process.

One of the most common scams has been to convince an unwary buyer that the instructions for wiring funds have changed at the last minute “for security reasons.” The email, which appears to come from the title company or other settlement service provider, asks the buyer to wire their funds to a different link than previously agreed. The unsuspecting buyer who falls for this deception will discover, too late, that their money has been diverted to the scammer’s offshore account and is gone forever, along with the scammer.

The obvious advice is to avoid getting taken in by this kind of chicanery. Never wire funds without personally verifying with the title company or real estate closing lawyer that any change is genuine. For those unfortunates who may fall prey to the scam, there are some immediate actions that may offer a slim chance to recover the misdirected funds.

Contact the bank or other financial institution the funds were sent from. They may be able to stop the transfer.

Contact all parties involved in the real estate transaction, including the title and escrow people, the seller and the agents.

Inform the FBI immediately. You can file a complaint at www.ic3.gov. This should be done as quickly as possible. Even waiting just 72 hours could be too late for any recovery.

There are few experiences in life that are more stressful, emotional and confusing as buying a home. Criminals are well aware of this and will do their utmost to leverage those aspects to separate unsuspecting people from their money.

Millennials Buying Big in the ‘Burbs

While most people associate the ‘hip younger crowd’ as living in cramped apartments and condos in the heart of the city, a recent study suggests that today’s millennial generation is going for amenity rich neighborhoods in the suburbs!

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Millennials are calling. They want the suburbs back.

Like generations before them, millennial homebuyers are beginning to shy away from city life, taking up residence in the suburbs—with one key difference.

According to a report by Zillow, millennial homebuyers are passing over starter homes, paying up for square footage typical of older generations: roughly 1,800 square feet.

Their preferences, however, reflect those of their older counterparts—specifically, an appetite for community amenities and townhouses.

“Millennials have delayed home-buying more than earlier generations, but don’t underestimate their impact on the housing market now that they’re buying,” says Jeremy Wacksman, CMO at Zillow. “As members of this huge generation start moving into the next stage of life, expect the homeownership rate to tick up and suburbs to change to suit their urban tastes. We’re constantly learning about this young group of homebuyers—we’re finding that they are more similar to older generations than many thought. Their views on community and homeownership are pretty traditional, and they don’t all fit the urban stereotype you might have in your head.”

Millennial homebuyers are also putting down roots like older generations—64 percent of those who moved in 2016, in fact, stayed within the same city, and only 7 percent relocated to another state, according to the report.

Half of millennial homeowners are in the suburbs, while 33 percent are in urban areas and 20 percent are in rural areas. Forty-two percent of homebuyers in 2016 were millennials.

Negotiations don’t necessarily end when you and the seller sign the contract to purchase. You have the right to have the home you’re buying inspected for soundness, which you can include as a contingency to your offer. That way, if the inspection reveals a serious issue, you and the seller can address it through renegotiations.

During the inspection process, the inspector is required to tell you about the condition of the appliances, heating and cooling, electrical and plumbing systems, foundation, roofing, exterior materials and so on.

Depending on where you live, you may also get separate inspections for pests and environmental issues such as radon. You’ll also learn if your future home is up to current building codes and what needs to be done to bring it up to code.

Most sellers expect to make reasonable repairs and replacements if the inspection reveals an issue that wasn’t obvious when you first agreed to terms. As long as communication remains open and civil, the seller should have as much desire to make the sales contract work as you do.

If you are a first-time homebuyer, you’ll have a much easier time finding and financing your next home if you follow these tried and true tips:

Hire an experienced real estate professional: Buying a first home is a complex process. Your Berkshire Hathaway HomeServices professional will assist you through the hurdles of neighborhood searches, comparing homes, making an offer, inspections and appraisals, as well as help you identify the best values.

Check and repair your credit:Banks use your credit scores to make lending decisions, so make sure your credit is accurate and deficiency-free. Order your credit reports and scores by visiting http://www.annualcreditreport.comso you can make repairs, if needed.

Get pre-approved:To get pre-approval, you have to apply for a loan and share your income, work history, debts and other information. Your lender will confirm your down payment source, interest rate, type of loan and loan term. Only then will you know exactly how much home you can buy.

Check out federal, state and local government incentives:To learn about first-time home buyer programs, see:http://www.grants.govorhttp://www.hud.gov. Click on Housing Authorities to find out what’s being offered in your community.

Prepare to compromise:There’s no perfect home, so you’ll have to prioritize your wish list. Older homes often need cosmetic work so expect to pay more for a home in pristine move-in condition.

Make a long-term investment:Equity is built over time, so plan to occupy your home for several years or more. Your home is also an investment in happiness and that can be the best deal you ever make.

Homeowners undertaking a renovation may either reap rewards come resale, or regrettably find themselves in the red. The latter, says Scott Robinson, president of the Appraisal Institute, is more likely—somewhat.

“Home improvement projects are not necessarily investments in which a homeowner should expect a dollar-for-dollar return,” explains Robinson, who oversees the nation’s largest association of real estate appraisers. “Rather, these projects can increase the likelihood of a sale, or that a property will be comparable to other properties in a neighborhood.”

Robinson advises renovators to consider if the improvement is in keeping within what’s standard in the community.

“Projects that take a home significantly beyond community norms are often not worth the cost when the owner sells the home,” Robinson says. “If the improvements don’t match what’s standard in a community, they’ll be considered excessive.”

Robinson notes renovators may find it best to hold off on large-scale projects if they’re unsure of how long they’ll be in their home. Generally, the longer a homeowner stays in a home, the greater the opportunity for a return on investment.

A real estate appraiser can conduct a feasibility study, which offers an unbiased analysis of what the home would be worth before and after a project. During the study, the appraiser will analyze the property, weigh the cost of rehabilitation, and provide an estimate of the property’s value before and after the improvement.

Currently, the projects with the highest expected return on investment (ROI) are attic insulation, manufactured stone veneer and a garage door replacement, according to Remodeling magazine’s Cost vs. Value Report. Other projects with potential payoffs are an entry door replacement and a minor kitchen remodel.

Berkshire Hathaway HomeServices, part of the HSF Affiliates LLC family of real estate brokerage franchise networks, released results from its 2015 Homeowner Sentiment Survey indicating a significant split in the way real estate consumers perceive the Federal Reserve’s anticipated raising of its benchmark interest rate and the subsequent impact on mortgage rates.

Existing homeowners expressed indifference to the notion of a lift in mortgage rates as a result of the Fed’s action. By contrast, 62% of prospective homeowners – a survey group composed mainly of millennials and Gen-Xers – said rising mortgage rates would make them feel anxious about their current financial situations.

It’s been nearly 10 years since the Fed raised its benchmark rate, which stands near zero as part of the Fed’s effort to stimulate the U.S. economy. Accordingly, mortgage rates, which move in response to the fed funds rate, have hovered at or near historic lows for years. Yet in the survey, 67% of prospective homebuyers categorized the level of today’s mortgage rates as “average” or “high.”

“The Fed is seeing more people going back to work and with the expectation of job growth for America it feels comfortable with its intent to raise rates,” said Berkshire Hathaway HomeServices President Stephen Phillips. “But the reality is that an entire generation of first-time buyers has never experienced a meaningful rate increase; this is a new and unfamiliar phenomenon to them.”

Should mortgage rates rise in response to a boost in the fed fund rate, many prospective homeowners said they would have to alter their home searches and 51% would adjust their savings pace. In addition, exactly half of prospective homeowners believed they would experience more difficulty affording their ideal home. Current homeowners, whose ranks are mostly Boomers and Gen-Xers, said that increased mortgage payments would mean more personal sacrifices in areas such as family vacations, home improvements and shopping.

Fed policymakers have said the pace at which they’ll raise interest rates will be gradual – an increase of a quarter of a percentage point is typical. A similar rise in mortgage rates would add about $43 a month to a hypothetical $300,000, 30-year mortgage with a 3.75% rate, explained Gino Blefari, CEO of HSF Affiliates. “A bump in mortgage rates has more bark than bite,” he said. “The average American spends about twice as much every month on coffee[1].”

A majority of current homeowners (59%) and half of prospective homeowners believed interest rates are holding steady. Lower interest rates remain the top reason why many survey respondents view the current housing market favorably.

Respondents also identified factors they believed are driving U.S. real estate forward. Increased residential construction and increased construction in urban areas offering more housing choices closer to work topped the list. Respondents also indicated that the housing market is benefiting from an increase in millennial buyers and by a boost in housing inventory; the latter factor has hamstrung real estate in many markets since the downturn. (See Homeowner Sentiment Survey results from September.)

“As always, our agents and the industry as a whole must take great care to educate buyers and sellers about the real estate process, which includes mortgage rates,” said Blefari. “A Fed rate increase may grab people’s attention, yet the cost of borrowing money to buy a home remains historically low by all measurements. From our perspective, even though we can’t predict the future, it looks like mortgage rates will remain attractive, and that’s good for consumers and the real estate market.”

The full survey details are available upon request.

Berkshire Hathaway HomeServices Consumer Sentiment Survey Methodology

Interviews with 2,502 respondents were conducted online by Edelman Berland in November 2015. The respondents captured were either current homeowners (individuals who currently own a home as a primary residence) or prospective homeowners (individuals who are looking to buy a home within the next six months). The margin of error is +/-2.2% for current homeowners and +/- 4.4% for prospective homeowners.

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About Berkshire Hathaway HomeServices and HSF Affiliates LLC

Berkshire Hathaway HomeServices, based in Irvine, CA, is a real estate brokerage network built for a new era in residential real estate. The network, among the few organizations entrusted to use the world-renowned Berkshire Hathaway name, brings to the real estate market a definitive mark of trust, integrity, stability and longevity. Visit www.berkshirehathawayhs.com.

Irvine, CA-based HSF Affiliates LLC operates Berkshire Hathaway HomeServices, Prudential Real Estate and Real Living Real Estate franchise networks. The company is a joint venture of which HomeServices of America, Inc., the nation’s second-largest, full-service residential brokerage firm, is a majority owner. HomeServices of America is an affiliate of world-renowned Berkshire Hathaway Inc.

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